Wednesday, 28 May 2014

Jaitley hints at raising defence FDI cap

New defence minister endorses
UPA appointment of Lt Gen Dalbir Singh Suhag as next army chief

By Ajai
Shukla

Business Standard, 28th May 14

On a day
when most new ministers reached their respective ministries bright and early,
it was past noon when Arun Jaitley arrived at the defence ministry (MoD) in
South Block, after spending the morning at the finance ministry across the
road.

Mr Jaitley quickly
clarified that his custodianship of three crucial ministries --- finance, corporate
affairs and defence --- did not mean the MoD would remain neglected for long. Terming
this a “transient phase”, he said a full-time defence minister would be
appointed in a cabinet expansion within a “couple of weeks”.

Notwithstanding
his temporary status, Mr Jaitley hinted that the 26 per cent cap on foreign
direct investment (FDI) in the defence sector could be raised, which has been a
longstanding demand from international defence companies.

Pointing
out that FDI in defence had first been allowed by the Vajpayee government (in
2001), Mr Jaitley said that he would be “personally willing to examine” a
review of the cap.

Noting that
the finance and corporate affairs ministries would play a role in any decision
to raise the FDI limit, he admitted that the question “had already come up in
my preliminary discussions today and therefore I do not want to say anything
more before I look deeply into the matter.”

The BJP’s
election manifesto said that it would “encourage private sector participation
and investment, including FDI in selected defence industries.” The manifesto
does not commit to increasing the FDI cap across the board.

Mr Jaitley
endorsed the UPA government’s decision to name Lt Gen Dalbir Singh Suhag as the
next army chief, stating, “I firmly believe that there should be no controversy
on appointment of the person concerned. Some comments may have been made
regards the procedure of (his) appointment but there should be no reflection on
the person concerned.”

Taking a
swipe at the AK Antony-led MoD for having “slowed down” equipment
modernisation, the stopgap defence minister declared that quick procurement would
be “a matter of top priority” for the new government.

However, Mr
Jaitley struck a more cautious note whilst addressing senior ministry
bureaucrats of the rank of joint secretary and above. He stated that the
government would like to accelerate equipment procurement, “but established
procedures are there. We would like to ensure that there are no avoidable
consequences.”

The three
service chiefs also called on Mr Jaitley together in his office.

Also at the
MoD today was the new minister of state for defence, Rao Inderjit Singh, who
had held the same portfolio in the UPA government from 2004-2009. His
disillusionment with the Congress began after he was dropped as a minister in
2009, leading eventually to his joining the BJP.